Revenue growth across Taiwan's technology sector slowed for a second month in July, but the cooling owes more to analysts catching up with reality than to any fading in demand.
The aggregate Taiwan composite tracked by Wedbush, the US investment bank, rose 3% in July, down from 6% in June and 4% in May.
Yet every one of the 18 categories in the index performed at or above expectations, the widest breadth the broker has recorded since it began compiling the data.
Memory still leads
Memory again led the pack, though its beat narrowed sharply to 13% above expectations, from 31% in June.
Matt Bryson, the Wedbush analyst behind the note, argues the smaller beat reflects expectations catching up to pricing rather than any loss of momentum.
Sell-side estimates for the category jumped 47% over the course of the month, even as memory revenues rose 11% from June.
Leadership rotated to the memory makers Nanya, Winbond and ADATA, with Nanya's sales running around eight times higher than a year earlier.
The retreat of module makers such as Team Group and Apacer, whose sales fell month on month, points to DRAM pricing rather than retail demand as the driver.
Bryson expects memory gains of at least 20% this quarter, with selling prices in some categories rising above 30%, and sees the risks skewed upwards.
Servers moderate
The server complex cooled more visibly, with contract manufacturers and server categories landing 4% and 2% above expectations, against 10% and 9% in June.
Wedbush reads this as estimates converging on a run rate these names have beaten for months, not a change in data centre demand.
Quanta, the server maker, is still growing sales at 131% year on year, with peers Inventec, Wistron and Wiwynn all up sharply.
Even so, the broker flags the risk that long-expected slower personal computer builds are finally starting to feed through to the supply chain.
Compute keeps pulling
Away from memory, the strongest gains came from circuit board makers tied to artificial intelligence servers, where laminate suppliers EMC and ITEQ each roughly doubled sales year on year.
Wedbush sees that strength as mirroring the compute and accelerator demand flagged in recent results from TSMC, AMD and Intel.
Price, not volume
The most cautious signal in the data is that much of the strength now reflects higher prices rather than higher volumes.
Personal computer makers and motherboard suppliers outpaced the server-levered categories for the first time in months.
But Wedbush ties this mostly to higher memory costs being passed on, rather than any consumer recovery.
A weaker Taiwan dollar flattered the numbers too, averaging around 32.22 to the US dollar in July, close to 2% softer than in June.
That means part of the reported growth is simply currency translation rather than stronger underlying sales.
